NEWS ANALYSIS
CapitaLand's not-so-small about turn
Developer relents in building shoebox
units to appeal to cash-tight buyers
Published on Sep 25, 2013
By Melissa Tan
MARKET forces appear to have brought about a sea change at CapitaLand, whose former boss once famously decried shoebox units as being "almost inhuman".
The giant developer is now building
homes that are smaller than 500 sq ft - shoebox size, in other words - to lure buyers seeking lower total price
quantums. Gone, too, are brand-name foreign designers for its residential projects.
This departure is most clearly seen in its Sky Vue development in Bishan, which will be the true test of its new strategy when the project goes on sale this weekend.
The 694-unit project includes units as
small as 484 sq ft and is designed by a local firm, DCA Architects.
That stands in stark contrast to Sky
Vue's pricier next door neighbour Sky Habitat, which CapitaLand launched in April last year. The smallest homes at the 509-unit development are one-bedders measuring 710 sq ft.
President and group chief executive Lim Ming Yan said in July that the firm planned to alter the sizes of the homes it would build. "We want the right sizing, (to) put in the right layout, so our users will find it a lot more user-friendly and at the same time something they can afford. This is the direction we're moving towards," he said in a Bloomberg report. This new direction seems to be the opposite of the one set by former chief executive Liew Mun Leong, who said in May last year that he was "dead against shoebox developments... It's almost inhuman".
He pursued the theme a month later,
saying: "CapitaLand does not build
residential units for sale that are less than 500 sq ft each." The firm's Bishan projects show how the market has changed in recent months - and why CapitaLand has likely had a change of heart since Mr Liew's remarks. Both plots cost about the same price per sq ft (psf) per plot ratio (ppr), but Sky Vue is going for significantly cheaper at $1,380 psf to $1,550 psf. Sky Habitat's average selling price is $1,589 psf. This will mean thinner profits at Sky Vue, which consultants estimate has a breakeven price of about $1,350 psf. CapitaLand paid $869 psf ppr for the Sky Habitat land parcel, 27 per cent more than the second-highest bid, in February 2011. It paid $853 psf ppr for the Sky Vue plot last November. Unlike Sky Vue, Sky Habitat boasts a design by renowned Israeli architect Moshe Safdie, who drew up the iconic Marina Bay Sands integrated resort.
CapitaLand has brought in other famous international architects for its Singapore projects. Its 1,040-unit The Interlace in Alexandra Road, which was launched in September 2009, was designed by German architect Ole Scheeren, famed for the distinctive China Central TV building in Beijing. CapitaLand's 1,715-unit d'Leedon condo in Farrer Road, which went on sale in November 2010, was designed by Iraqi-British "starchitect" Zaha Hadid. Market watchers say that eschewing
international celebrity architects in favour of local ones and building smaller, cheaper units - both in psf terms and total quantum - could mark a move towards more cautious pragmatism driven by bottom-line concerns.
"It used to rope in these global brands thinking that the market would meet that. But now (there is) data showing that there is demand for small (home) formats from the market," said one analyst, who declined to be named.
Experts said the shift is likely in response to poor market conditions following rounds of property market cooling
measures. CapitaLand slashed prices at projects such as d'Leedon and The Interlace by as much as 15 per cent after the Government's seventh round of property curbs in January. It also said in July that it was marketing some units at Sky Habitat at a discount.
Still, 318 units at d'Leedon and 207 units at The Interlace remained unsold at the beginning of this month, which works out to about a fifth of each project.
At Sky Habitat, 337 units are unsold, or two-thirds of the total number.
How viable CapitaLand's more cautious strategy is will be seen as soon as this weekend when buyers pass judgment on Sky Vue.
Small may be beautiful after all.
melissat@sph.com.sg
CapitaLand's not-so-small about turn
Developer relents in building shoebox
units to appeal to cash-tight buyers
Published on Sep 25, 2013
By Melissa Tan
MARKET forces appear to have brought about a sea change at CapitaLand, whose former boss once famously decried shoebox units as being "almost inhuman".
The giant developer is now building
homes that are smaller than 500 sq ft - shoebox size, in other words - to lure buyers seeking lower total price
quantums. Gone, too, are brand-name foreign designers for its residential projects.
This departure is most clearly seen in its Sky Vue development in Bishan, which will be the true test of its new strategy when the project goes on sale this weekend.
The 694-unit project includes units as
small as 484 sq ft and is designed by a local firm, DCA Architects.
That stands in stark contrast to Sky
Vue's pricier next door neighbour Sky Habitat, which CapitaLand launched in April last year. The smallest homes at the 509-unit development are one-bedders measuring 710 sq ft.
President and group chief executive Lim Ming Yan said in July that the firm planned to alter the sizes of the homes it would build. "We want the right sizing, (to) put in the right layout, so our users will find it a lot more user-friendly and at the same time something they can afford. This is the direction we're moving towards," he said in a Bloomberg report. This new direction seems to be the opposite of the one set by former chief executive Liew Mun Leong, who said in May last year that he was "dead against shoebox developments... It's almost inhuman".
He pursued the theme a month later,
saying: "CapitaLand does not build
residential units for sale that are less than 500 sq ft each." The firm's Bishan projects show how the market has changed in recent months - and why CapitaLand has likely had a change of heart since Mr Liew's remarks. Both plots cost about the same price per sq ft (psf) per plot ratio (ppr), but Sky Vue is going for significantly cheaper at $1,380 psf to $1,550 psf. Sky Habitat's average selling price is $1,589 psf. This will mean thinner profits at Sky Vue, which consultants estimate has a breakeven price of about $1,350 psf. CapitaLand paid $869 psf ppr for the Sky Habitat land parcel, 27 per cent more than the second-highest bid, in February 2011. It paid $853 psf ppr for the Sky Vue plot last November. Unlike Sky Vue, Sky Habitat boasts a design by renowned Israeli architect Moshe Safdie, who drew up the iconic Marina Bay Sands integrated resort.
CapitaLand has brought in other famous international architects for its Singapore projects. Its 1,040-unit The Interlace in Alexandra Road, which was launched in September 2009, was designed by German architect Ole Scheeren, famed for the distinctive China Central TV building in Beijing. CapitaLand's 1,715-unit d'Leedon condo in Farrer Road, which went on sale in November 2010, was designed by Iraqi-British "starchitect" Zaha Hadid. Market watchers say that eschewing
international celebrity architects in favour of local ones and building smaller, cheaper units - both in psf terms and total quantum - could mark a move towards more cautious pragmatism driven by bottom-line concerns.
"It used to rope in these global brands thinking that the market would meet that. But now (there is) data showing that there is demand for small (home) formats from the market," said one analyst, who declined to be named.
Experts said the shift is likely in response to poor market conditions following rounds of property market cooling
measures. CapitaLand slashed prices at projects such as d'Leedon and The Interlace by as much as 15 per cent after the Government's seventh round of property curbs in January. It also said in July that it was marketing some units at Sky Habitat at a discount.
Still, 318 units at d'Leedon and 207 units at The Interlace remained unsold at the beginning of this month, which works out to about a fifth of each project.
At Sky Habitat, 337 units are unsold, or two-thirds of the total number.
How viable CapitaLand's more cautious strategy is will be seen as soon as this weekend when buyers pass judgment on Sky Vue.
Small may be beautiful after all.
melissat@sph.com.sg
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